How My Company Made Truly Open Management Work

This article is by Jim Whitehurst, the chief executive officer of Red Hat.

Most organizations, especially large enterprises, place a heavy emphasis on managing assets, everything from pencils and pens and laptops to machine tools. But what about managing innovation, the key value driver in a post-industrial economy? We need to enable employees to innovate better and faster than the competition, and as leaders we need to communicate better with today's workforce.

At Red Hat, a company built on open-source software, our solution has been to open things up by breaking down traditional organization hierarchies. Specifically, we’ve embraced the idea of “open management,” where we make the majority of our decisions and management procedures transparent to our workforce. At the same time, we use input and feedback from the workforce to make our decisions. In other words, we’ve created a win-win scenario, a virtuous cycle of sorts, where everyone feels engaged while the organization benefits from more effective and innovative decision making.

Not long after I took over as CEO of Red Hat, it became apparent to me that the organization’s mission statement was wordy and out of date. The company was entering new markets and experiencing tremendous growth that made it clear we needed to refocus on our mission.

Now, in most organizations, like Delta Airlines (my previous employer), the solution would have been easy: I, as CEO, would have convened a small group of senior executives who, along with the help of a high-priced consultant, would have crafted the company’s mission statement over a weekend retreat. Once complete, it would simply have been distributed out to the rest of the company. Voila. Job done.

But we know what really happens in these cases. No matter how many copies of the mission statement hang by the coffee pot or the soda machine, the result is always the same: Nobody cares. I knew an executive who carried a $50 bill to use as a challenge when he visited other companies. He would offer that $50 to anyone who could actually recite his or her company’s mission statement. Needless to say, he still has his $50.

No organization today can afford to tackle a project like writing a mission statement if it doesn’t produce some kind of return on the investment it requires in time, money, and energy. That’s why we decided that if we were going to craft a new mission for Red Hat, we wanted to ensure that everyone in the company had a chance to participate, encouraging a sense of ownership of the mission statement.

Every one of our more than 5,000 employees around the world has access to what we call Memo-list, a global mailing list where anyone can post ideas and news from around the country. Everyone in the company is subscribed to Memo-list, and everyone reads it. In this case, we turned to Memo-list to help gather input on the company’s mission statement.

Admittedly, soliciting ideas and feedback from thousands of employees isn’t easy. Not only can the volume of incoming ideas become overwhelming, but you—especially the CEO—need to prepare to be criticized, and harshly. This might seem unlikely. Why would anyone criticize the CEO? Wouldn’t they risk getting fired? But the truth is that unless the decision making process opens up, participation and, more important, results will be hard to come by.

Buying into open management is not to say that CEOs should encourage their employees to abuse them. It’s about bringing the wider business as a whole into the decision making process. It adds innovation, transparency, and participation to what has historically been a closed, almost proprietary process. Let’s face it: Traditional top-down management simply isn’t good enough anymore.

I’m happy to report that using open management to create our mission statement process was a huge success (here's the final result). Not only did we write a meaningful mission statement, but I would wager $50 that most, if not all, Red Hat employees could cite it by heart. That’s great ROI in my book.

It’s the twenty-first century, the age of Facebook, Twitter and WikiLeaks. It’s time to open management up.